3 Small Cap Chinese Stocks Ready To Explode Higher

Over the past few years accounting troubles and short-seller attacks have plagued a variety of Chinese companies causing a number of U.S.-listed Chinese stocks to plunge lower.

In 2011 alone, there was more than 20 Chinese companies that were delisted or halted amid allegations of accounting fraud. Because of this investors have been hesitant to invest in Chinese companies due to the lack of financial transparency.

So, is it a safe bet to invest in Chinese stocks once again? It is tough to say, but there are a couple of Chinese stocks that have the potential to move higher in the coming months.

Here are 3 small cap Chinese stocks ready to explode higher.

1. 58.com Inc. (NYSE: WUBA)

58.com an online classifieds company that has been dubbed the Craigslist of China. The company just recently went public on the New York Stock Exchange last week.

58.com has 130 million monthly users and had about 4.3 million active local merchants in its marketplace in the second quarter. The company also said its website averaged 1.9 million listings per day from 380 Chinese cities and about 39 percent of its average monthly page views came from mobile applications.

This is a low float stock that has the potential to move much higher over the coming months.

2. Zoom Technologies (NASDAQ:ZOOM)

Zoom Technologies is a China-based cell-phone manufacturing company for the Chinese market, and also engages in distribution of cell-phones in a number of countries, including for T-Mobile (subsidiary of Deutsche Telekom, DT).

The Chinese mobile market is evolving and growing 13.5% per year as cable and telecom network operators expand their video, data and voice services. Zoom has the ability to capitalize on China’s mobile telecommunications market, where the penetration rate of mobile phones is only 64%, compared to near 100% in many developed countries.

ZOOM has been in a downtrend the past few years and is currently trading at just 0.33 cents per share. Look for a reverse of trend and sharp move to the upside in the coming months.

3. Kandi Technologies (NASDAQ:KNDI)

KNDI is a maker of electric vehicles and has started to get the attention of those in the investment world as a mini Tesla Motors (TSLA). TSLA is also a maker of electric vehicles and has been a high-flyer this year, going from $30 to over the $100 mark.

KNDI is a stock that I recommended back in July to subscribers around the $4.50 mark. For subscribers who held the stock into September saw some nice gains as the stock reached over $8 per share.

KNDI has since consolidated lower to just under $7 per share and offers a nice entry point to pick up a small amount of shares.